Improving profitability, solid financial position and updated financial targets

Transcription

1 Improving profitability, solid financial position and updated financial targets Jussi Noponen CFO Metsä Board Capital Markets Day 2017

2 Disclaimer This presentation includes forward-looking statements. The words believe, expect, anticipate, intend, may, plan, estimate, will, should, could, aim, target, might, or, in each case, their negative, or any similar expressions identify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. By their nature, forward-looking statements are subject to assumptions, risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual results may differ, even materially, from those expressed or implied by these forward-looking statements. We urge presentation participants not to place undue reliance on such statements. The information and views contained in this presentation are provided as at the date of this presentation and are subject to change without notice. Metsä Board does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. Viewers should understand that this presentation does not constitute, and should not be construed as, an offer to buy or subscribe for Metsä Board s securities anywhere in the world or an inducement to enter into any investment activity relating to the same. No part of this presentation should form the basis of, or be relied on in connection with, any contract or commitment or decision to invest in Metsä Board securities whatsoever. Potential investors are instructed to acquaint themselves with Metsä Board s annual accounts, interim reports and stock exchange releases as well as other information published by Metsä Board to form a comprehensive picture of the company and its securities. Metsä Board publishes inside information according to Market Abuse Regulation (MAR) and rules of the Nasdaq Helsinki. 2

3 Contents Husum profit potential Update on FX hedging and debt Cost structure and main drivers Updated financial targets Summary 3

4 High potential to improve profitability in Husum Folding boxboard production Costs per tonne produced are higher than in our other mills due to lower capacity utilisation rate Production line fully utilised by the end of 2018 Total deliveries to Americas will increase PE-coated paperboards generate sales in a new customer segment Linerboard production Volumes of coated linerboards will grow 4

5 Potential to improve profitability of Husum At least EUR 100 million EBIT improvement from 2016 to ,000 tonnes 2016 of pulp Efficiency >95% with 2019 production lost in 2016 Restructuring: improvement programme FBB capacity utilisation rate normal sales price + EUR 25 million + EUR 5 million + EUR >70 million 5

6 Impact of Husum investment programme on operating net working capital Low ONWC at the end of 2015 due to high payables and low inventories During Husum FBB ramp-up, ONWC has increased (3/2017: EUR 319 million) Growing sales will improve inventory rotation towards yearend. ONWC/Sales expected to be 15 19% M % Operating net working capital M Accounts payable M Accounts receivable M Inventories M ONWC/sales, % 6

7 EUR million and cash flows Strong cash flow outlook resulting from improving profitability, stabilising working capital and lower investments Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Cash flow from operations, quarterly Cash flow from operations, rolling 12 months Free cash flow, quarterly Free cash flow, rolling 12 months 7

8 Update of FX hedging and debt

9 FX exposure and sensitivities FX exposure by currency, Annual gross amount EUR 1.2bn FX sensitivities before hedges 6% 2% USD 10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board s operating result of 34% 58% SEK Currency USD Next 12 months EUR +70 million GBP Swedish krona EUR -40 million Other currencies GBP EUR +7 million 9

10 Updated hedging policy from Q onwards New hedging policy gives more visibility to future cash flows Old policy (before 2017) New policy (2017 onwards) 100% of balance sheet position * and 25% of estimated annual cash flows 100% of balance sheet position * and 50% of estimated annual cash flows * Net of A/R and A/P The amount of hedging may deviate from the norm by 40% in either direction Hedges are primarily allocated to the following two quarters Currently hedging is at the new norm level 10

11 The aim is to reduce interest-bearing debt in 2017 by EUR 100 million EUR million Maturity schedule in long-term IB debt / >2021 Long-term interest bearing liabilities Committed undrawn credit facilities 11

12 Debt structure and liquidity 31 March 2017 Interest-bearing debt, total EUR 660 million Available liquidity, total EUR 401 million Bonds Loans from financial institutions Pension loans Finance leases and other loans Other short-term loans Cash and cash equivalents Revolving credit facility Unraised pension loans Average maturity of long-term loans on 31 March 2017 was 2.2 years. Interest rate duration has been extended from 13 to 30 months during Q2/

13 Cost structure and main cost drivers

14 Metsä Board s cost structure in 2016 Personnel 14% Other fixed 15% Logistics costs 16% Total costs in 2016 were EUR 1.6 billion, of which 30% were fixed costs and 70% variable costs Other variables 3% Wood 26% 14 Energy 12% Chemicals, pigments and fillers 14%

15 Logistics costs Main drivers in logistics costs Volume growth Geographic sales mix Trade balances Fuel price 70% of maritime spend is under contracts with fuel price clause. Fuel is ~20-30% of cost In road freight, ~25-30% of the cost is based on fuel price clause Regulations Annual spend EUR 250 million Rail 8% Ports & terminals 17% Road 34% Maritime 42% 15

16 Share of costs Metsä Board logistics cost along the delivery chain Land Ports & terminals Maritime Ports & terminals Land 50% 40% 30% 20% 10% 0% Land Domestic + Export Ports & terminals Domestic Maritime Ports & terminals Distribution Land Distribution 16

17 The biggest cost component is wood Wood sourcing by country in 2016 Pulpwood roadside prices in Finland Metsä Board (total 4.6 million m 3 ) Sweden 38%, Finland 31%, Baltic countries 18%, Russia 13% Metsä Fibre pulp mills (total 12.6 million m 3 ) Finland 89%, Russia 6%, Baltic countries 5% Spruce pulpwood roadside Birch pulpwood roadside Pine pulpwood roadside Source: Luke

18 Over 80% of energy Metsä Board uses is CO 2 -free Primary energy used in 2016 (total 12 TWh) 51% wood based, 25% nuclear, 5% hydro, 9% gas (natural gas and LPG) and 10% from other sources Electricity sourcing in 2016 (total consumption 2.4 TWh) Metsä Board will be nearly self-sufficient in electricity in Finland when Metsä Fibre s new bioproduct mill and TVO s OL3 reactor (expected start-up 12/2018) are in full production In Sweden, Metsä Board will continue to purchase approx. 450 GWh/a. Long hedging duration. Purchased energy; 39% Through Metsä Fibre shareholding; 6% Electricity sourcing Outsourced generation; 3% Own generation; 21% Nuclear through PVO shareholding; 32% 18

19 Financial targets and summary

20 Updated financial targets Financial target Change/update Target level Actual 2016 Actual 2015 Actual 2014 Comparable ROCE Unchanged >12% 8.1% 11.3% 9.1% Net debt / comparable EBITDA New target <2.5x 2.0x 1.2x 1.8x Growth in paperboard deliveries Dividend payout New target New target level Annual growth in paperboard deliveries to exceed relevant market growth * 12% 13% 10% At least 50% of the result for the period 76% 44% 57% * Estimated average market growth globally in fresh fibre paperboards is 3 4%/a 20 Previous target for net gearing (<70%) no longer in use

21 Summary High potential to improve profitability in Husum Metsä Board is operating in stable wood markets. Self-sufficiency in electricity is increasing Updated financial targets support a good balance between profitable growth and dividends 21

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